After Blockchain Push, UAE Investigates Ripple (XRP) and a National Cryptocurrency

A major payments provider in the United Arab Emirates (UAE) is implementing blockchain-based systems to operate remittance facilities, while the country’s government is discussing the creation of a state-backed cryptocurrency in partnership with Saudi Arabia, as per two reports in the week of December 11, 2018.

RippleNet Technology to Be Deployed

Continuing its strong onboarding performance in the Middle East and Asia, U.S. startupRipplehas signed an understanding with Abu Dhabi-basedUAE Exchangeto launch cross-border remittances via the former’s enterprise-gradeRippleNetblockchain, asreportedbyReuters.

Asia receives over $613 billion each year in remittances, with a large chunk coming from expat workers in the Middle East. The latter region is dominated by foreign exchange and payments companyFinablr, a local subsidiary to UAE Exchange. While most funds are currently sent through foreign exchange branches, websites, and mobile apps, the company intends to deployblockchain technologyfor ensuring a safer, faster, and more secure payment process.

UAE Exchange expects to go live with Ripple as early as Q1 2019, “with one or two Asian banks” expected to begin accepting blockchain-based remittances.

CBDC for Cross-Border Payments

In another development, theCentral Bank of UAEis undertaking a joint project with the Saudi Arabian Monetary Authority to issue a blockchain-based digital currency to enable swift transactions between the two bordersreportedGulf Times.

“This is probably the first time ever that witnesses the cooperation of monetary authorities from different countries on this topic and we hope that this achievement will foster similar collaboration in our region.”

However, Al Mansouri was quick to note that the proposal exists in its research and study stages, with both parties yet to dive deep into the concept. The study is also presumably worked upon by a large group of officials and researchers, with no information of the final team leading the project and the total costs associated with the project available at the time of writing.Al Mansouri added that thedigital currencywill strictly be available for use between banks of the two countries, stating, “this would be more efficient…This is between us and the banks.”Both the central banks of UAE and Saudi Arabia have called outbitcoinand other cryptocurrencies previously, condemning the pioneer cryptocurrency’s price volatility and risks. However, the narrative may change if officials were to understandblockchain technologyand its myriad benefits.Al Mansouri also noted that essential developments in the fintech sector present both a unique opportunity and challenge to understand the risks involved. Both industry players and market participants must cooperate to determine the best way to mitigate risks and enhance the industry.